Ex-SAC portfolio manager Martoma appears in New York court

Published 9:37 pm, Monday, November 26, 2012

Former SAC Capital Advisors LP portfolio manager Mathew Martoma, charged in what prosecutors called the biggest insider trading case in history, appeared in federal court Monday in New York.

Martoma, 38, is accused of using illegal tips about a clinical trial of an Alzheimer's disease drug to help Stamford-based SAC, the hedge-fund company founded by Greenwich resident Steven A. Cohen, make $276 million on shares of Elan Corp. and Wyeth LLC. He was arrested at his Boca Raton, Fla., home Nov. 20 and freed on $5 million bond. He appeared before U.S. Magistrate Judge James Cott in Manhattan.

The defense and prosecution Monday agreed to a modified bail package under which the $5 million bond must be secured by $2 million in cash or property, as well as signatures from three instead of two financially responsible people. Martoma, who surrendered his and his children's travel documents, is limited to Florida, Massachusetts, New Jersey and parts of New York.

The defendant, wearing a gray jacket, dark pants, a sweater and tie, was accompanied by his wife, Rosemary. He didn't speak during the 13-minute court appearance except to tell the judge he understood he could be arrested if he violates the bail terms. Martoma, holding hands with his wife, emerged from the courtroom after the proceeding into a crowd of reporters.

He is charged with conspiracy and two counts of securities fraud, a crime that carries a maximum 20-year prison term. Defense lawyer Charles Stillman has said he expects his client to be exonerated.

Before and after the court appearance, Martoma and his wife chatted with defense lawyers, smiling. Rosemary Martoma, a pediatrician, sat straight-backed as she listened to Cott and the lawyers discuss bail. At the end of the hearing, picking up their coats and bags, she joked, "I'm the bag lady."

Martoma was allowed to remain free Monday on his signature and that of his wife. The judge set the next court appearance for Dec. 26. Stillman said the parties may agree to change the date.

"We took care of business today and we'll be back another day," Stillman said outside court.

The government says Martoma got tips about the drug bapineuzumab from Dr. Sidney Gilman, an 80-year-old University of Michigan neurologist who was overseeing part of the trial. Prosecutors have reached a non-prosecution agreement with Gilman, who is cooperating with the investigation.

Prosecutors and the Securities and Exchange Commission, which has sued Martoma, have linked SAC founder Cohen to the case, although he isn't identified by name in their complaints.

Martoma denies wrongdoing, and Cohen hasn't been sued or charged.

A spokesman for the SAC founder, Jonathan Gasthalter, has denied any wrongdoing and said SAC is cooperating with the government.

A person familiar with the matter said Cohen is the person identified in the criminal complaint as "Hedge Fund Owner" and in the SEC's suit as "Investment Advisor A."